For those not remembering the aforementioned, “Joe Camel” it was the cartoon advertising mascot employed by R.J. Reynolds™ to promote Camel® cigarettes in the late 80’s. It ran for about a decade ending in 1997.

Although it was said to be an attempt to bring attention back to an already established brand. What it did in conjunction, was bring attention to the fact via a 1991 study published in the Journal of American Medical Association™, that by the time children were of age 6, they could correctly associate “Old Joe” with cigarettes, as well as they could associate the Disney™ logo with Mickey Mouse®.

This was that defining moment when everything seemed to change when it came to smoking. I know, because I was an avid smoker myself at that time. The moment this product and habit was seen for what it was (e.g., a true physical and psychological dependent habit) where a link, whether intentional or perceived, could be argued that the intent was to link a brand or logo to children as to perpetuate or indoctrinate the idea that smoking was cool or hip – everything changed. And I mean just that – everything.

Just a bit for context: Near overnight, suddenly “lighting up” anywhere indoors was seen as the equivalent of fumigating the area for roach infestation, while demanding everyone remained in the room. The office, restaurants, airplanes, cars, et cetera, et cetera slowly became, “No Smoking” areas.

Not entirely at first, but little by little. First, quarantine areas were set aside for the “smokers” where one was now demanded to be sequestered from polite society to go “enjoy” our “filthy”, “vile”, “disgusting” (their words, not mine) habit, away from the upright, oh-so-better-than-thou, non-smoking community at large. Till it seemed the entire planet became a “smoke-free-zone.”

Personally, I only quit out of aggravation of needing to find an abandoned coal mine shaft every-time I felt the urge. But I digress.

So with the above for context, let’s see where we stand in comparison to this entire “social media” phenom shall we?

For a moment let’s move away from “the children” per se, and move into the adult arena.

Can you think (be honest now) of anyone that can’t put their smartphone down, or not pick it up every-time it chimes, for more than a minute? If you can say yes, to even one, how about if you increased the time to 10 minutes?

Here’s an even better question: Can you? Have you tried? What if I said no social media perusing, notifications, or messages of any type would be allowed till after 12 noon? Of course official work duties or necessities are exempt.

How about – how many times are you in a meeting, or out to coffee, supper, or just trying to have a conversation with someone and there’s more importance paid to the conversation on their phone, rather than the conversation that’s supposed to be taking place with you?

Have you ever asked them to put the phone aside for a moment, then watched as they twitched, fidgeted, and stirred until they could finally get “a hit?” Sound or look like anything familiar? (cough-smoking-cough)

During this period (i.e., 90’s) was when the entire sue-them-into-oblivion campaigns arose like weeds. Everyone wanted a piece of the tobacco industry’s check book. Individuals, States, and more began suing in one form or another.

Yes, there were legitimate health reasons against deceptive practices as a prime motivator, but another motivation was also there in the forms of great mountains of real money available if their cases could win. And in 1998 the, “Tobacco Master Settlement Agreement” was entered between the four largest U.S. tobacco companies culminating in $206 Billion over the first 25 years of the agreement.

Hmmm, big four, with that kind of wallet. (i.e., large, very large.) Now where could that same analogy be applied?

For those whom may not remember, this was a period where “secret documents” and “whistleblowers” were all the news of the day when it came to “big tobacco.” The companies CEO’s and more were brought before congressional committees where they were asked and responded, “…that they did not believe that cigarettes were addictive, but they would rather their own children did not smoke.”

I could go on and on, with example after example, for comparison. But let’s just use the above, for the moment. Because the similarities are striking, indeed.

Suddenly you have calls coming from everywhere to regulate social media for the “fake news” issues alone. Watchdog groups, government “think tanks”, government agencies, social justice warriors of all stripes are calling for some form of regulation to satisfy their concerns, starting with non-intrusive oversight, to out-and-out Orwellian styled authoritarian control.

Hint: Once the “government” gets the idea that control may be warranted, and there’s money to pay those presumed hefty fines? You can bet your bottom dollar some form of legislation is forthcoming – it’s only a question of when, and how much, both in oversight and money.

What’s a little different this time is that we don’t need any “secret documents”, “whisleblowers”, or congressional summonses to get the creators of this product to tell us what the powers-that-be are thinking about it behind closed doors. For they’re actually holding conferences and professing it to anyone that’ll listen via their own mouths.

Here are a few excepts made by Chamath Palihapitiya, former Facebook executive in a recent talk at Stanford Graduate School of Business™. To wit:

When asked how he feels about Facebook: “Tremendous guilt.” About the dopamine-driven feedback loops they created: “…destroying how society works.” Does he let his own children use it: “…aren’t allowed to use that shit.”

I would suggest you watch the entire talk and come to your own conclusions, Yet, notwithstanding, do you see the cigarette/tobacco/ parallel here? How about a little more? This time from the founding president of Facebook, Sean Parker speaking at a recent Axios™ event. Here are a few highlights, again, to wit:

“… It probably interferes with productivity in weird ways. God only knows what it’s doing to our children’s brains.”

“The thought process that went into building these applications, Facebook being the first of them, … was all about: ‘How do we consume as much of your time and conscious attention as possible?'”

“It’s a social-validation feedback loop … exactly the kind of thing that a hacker like myself would come up with, because you’re exploiting a vulnerability in human psychology.”

And what I see will be used as the coup de grâce by the army of attorneys salivating for the next big class-action battle in front of a jury…

“The inventors, creators — it’s me, it’s Mark [Zuckerberg], it’s Kevin Systrom on Instagram, it’s all of these people — understood this consciously. And we did it anyway.”

Let that sink in: “And we did it anyway.”

Once again, let me implore you to read, or watch, the above interview and come to your own conclusions. Lest I remind you – we are now talking about actively marketing via brand and product to 6 year olds.

But just like “big tobacco” executives of the past, big social media exec’s like those employed by Zuck and Crew are more than willing to tell you, like this response to a question from Wired™:

“It’s important to remember that Messenger Kids does not have ads and we don’t use the data for advertising. This provision about sharing information with vendors from the privacy policy is for things like providing infrastructure to deliver messages.”

“The goal is not to get kids onto Facebook,” he said. “There’s really no other reason for us to do this than to actually enable kids to communicate with their parents and vice versa, and kids to communicate with their friends within a safe zone that’s controlled by the parents.”

Call me skeptical, but the last time I heard something similar, it was CEO’s saying something to the effect that they believed “cigarettes were not addictive.” After all, I hear all Mark Zuckerberg wants to do is “connect people.”

I have a feeling the next “connection” coming towards everything social will be via settlements directly into government/lawyer coffers. After-all – when it comes to anything about “saving the children” the government loves a blustery, righteous indignation, feel-good campaign made possible via someone elses wallet. And social media has one, very large wallet to affix a bullseye on.

On an aside, I also believe the smart phone, as it is used today, will be seen going forward in the not-so-distant future the way smoking in general morphed into an unsightly or unruly habit.

Did I mention that lawyers and politicians just love, love, love big, stuffed, bull’s-eyes? If not.

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Over the course of the last week or so I’ve received not only push back, but rather, shrugs and more when queried on my take on the proposed tax cut bill, its process, progress, and what it might all mean for everyone, not just business. It would seem as long as every dip in the “market” gets bought – everything else is considered noise. (You can read my latest view here and here.)

There’s a real sense of blasé on the matter. In other words, people ask for your opinion or view, yet you can infer they really aren’t that interested with the answers. It’s not just me, for I’ve watched this happen when the discussion didn’t involve me directly, where I was only a bystander. It’s not overt, but if you watch and listen carefully, as one should. You can see it quite clearly.

Most today are under the guise (much like many a pol) that passing a tax bill of any measure is going to be a “good thing.” I couldn’t disagree more. It’s one thing for the average worker or employee type to state that. But for a business person? It shows just how little one has thought it all through. From my purview that’s near inexcusable, whether you’re a solo-practitioner, CEO of a global concern, or just someone following the path of the entrepreneurial mindset. (i.e., you may be employed by someone, but you are the one who is truly in charge, and responsible for you.)

When it comes to this current legislation – It’s going to have effects far and wide, and those effects may very well be onerous to those giving it nonchalant attention.

That means a business owner’s next $100 in earnings, under certain circumstances, would require paying more than $100 in additional federal and state taxes.”

That is currently “in the bill.” Yes, the very same bill everyone jumped up and down last week in celebration.

The above example hits the solo-practitioner with an effective tax rate of over 100%. i.e., You would, in-effect, have to pay the government for the privilege to work, then give them all the proceeds of that work, netting you below zero. That’s actually worse than an example using “slave wages.” And it’s not hypothetical. If the bill is passed, as is – that would now be your tax bill.

But not too worry, after all, it must be the only such oopsy contained in the remaining 499 pages or so, that no one took (or had) the time to read and weigh the consequences before passing it, right? Surely there could not be anything remotely concerning within the House’s version, that will now be added to all this, so it can be passed in the remaining few weeks, right? Right?

Footnote: These “FTWSIJDGIGT” articles came into being when many of the topics I had opined on over the years were being openly criticized for “having no clue”. Yet, over the years these insights came back around showing maybe I knew a little bit more than some were giving me credit for. It was my way of tongue-in-cheek as to not use the old “I told you so” analogy. I’m saying this purely for the benefit of those who may be new or reading here for the first time (and there are a great many of you and thank you too all). I never wanted or want to seem like I’m doing the “Nah, nah, nah, nah, nah” type of response to my detractors. I’d rather let the chips fall – good or bad – and let readers decide the credibility of either side. Occasionally however, there are, and have been times they do need to be pointed out which is why these now have taken on a life of their own. (i.e., something of significance per se that may have a direct impact on one’s business etc., etc.) And readers, colleagues, and others have requested their continuance.

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As we sit here today, the bill now known as “The Tax Cuts And Jobs Act” is being pounded out behind closed doors. The word “pounded” is a fitting description, because that’s precisely what is happening in all phases and forms. i.e., Members of both chambers are being pounded into submission via threats or payoffs for their support, while there will undoubtedly be more “pork” pounded within – it would make a real sausage blush.

The true issue at hand is this: They (e.g., GOP) believe it’s all about passing a tax cut bill in name only, with some great sounding sound bites and headlines to campaign on into the next election cycle, so substance ranks secondary. If one has any doubt, just look to any Sunday talk show for clues, the rhetoric is pure unadulterated fantasy land type arguments. And that’s just the moderators.

We are at a moment in time both politically, as well as economically, where everything can go awry faster, and far more severely, than those currently trying to estimate their current Bitcoin™ net worth. Hint: In a heartbeat – it could all be over.

And just to be clear, neither party will walk away unscathed. i.e., An abstention strategy like that being proposed by the opposing Party (e.g., Dem’s) will not act as the shield afforded the GOP after the Obamacare debacle, in my opinion.

Why? Let me put it this way: People are sick of it – been there, done that.

Healthcare is now an unmitigated disaster needing far more than just a “clean up on aisle 9” response. It needs a full teardown and rebuild requiring both parties to work earnestly as to remove the government’s intrusive tentacles, not probe them deeper. (I know, I can hear you through my screens, and I’m with you: “pure fantasy.”)

But yet, playing fast and loose with tax policies, on top of it? Turns the healthcare headaches up to 11, and the ensuing backlash throughout everything else exponentially so. (Remember, healthcare is 1/6th of the economy – taxes and regulations touch 100%. Think about it.)

The past election cycle showed that the electorate was fed up with “dancing around the edges, fiddling and diddling pols”, while taxpayers of all stripes were bloodied and beaten with higher taxes, regulations, and a “guaranteed” insurance policy that fewer and fewer Dr’s, along with entire “Exchanges” willing to issue/take said “insurance” with a deductible that’s now equivalent to a down-payment for a home: every – calendar – year.

The current powers-that-be are absolutely clueless just how ticked off everyone is. Again, on both sides of the aisle, especially the business community.

The business community wants (and needs) meaningful (think: “Bigly”), and near instant (think: within the same calendar year) change to much of the status quo in regards to healthcare, taxes, and regulations. Anything short of what was sold presumed as the first meaningful steps toward true government and institutional reform will be met by many a politician with immediate, knee-jerk type responses in much the same manner as the analogy conjures. The “markets” in-turn may get the full effect of a full-on drop kick.

I’m sorry for using this term so often, but it needs to be stated: Remember – this was to all supposed to be passed with the assurance, if-need-be, along purely partisan lines. If this procedure is wasted as to only do around-the-edges styled legislation. It will be seen as an outright betrayal. And the resulting backlash, fury is currently unknown. But make no mistake – a reckoning there will be. And the daily drip of what is being considered, as well as dropped, is adding fuel to that ire.

Again, if what gets passed in the end is nothing more than specious headlines, requiring a purely partisan vote to do so will be considered a complete and utter waste of political capital along with any remaining voter goodwill. Period.

This will be met along the lines fitting description, using terms like, fire-and-brimstone, as just one example. This, in my estimation, will be seen as reason to jettison them all. (“all” meaning entrenched re-elected, after re-elected purely partisan, establishment types.)

In other words, the ire of the “great unwashed” will grow in such tsunami type fashion that current party elders, from both sides of the aisle, could find themselves walking down the political plank, into oblivion. For just like a tsunami needs a catalyst – the tectonic upheaval that may arise from a watered down, pork laden, near 500 page filled tax reform joke book may indeed be that very catalyst, because the warning signs of seismic tremors are already appearing with frequency, as well as intensity.

The issue that will be almost to indignant to bear, again, on both sides, is Mr. Trump just might be – the last man standing.

I know, heresy too some, and requiring smelling salts for others. But if one thinks about it objectively, it’s not that far of a stretch, again, when contemplated (Trigger alert!) rationally and objectively, not emotionally. (Hint: He would still hold the argument of “I signed the best offered to me. Send me people who will do more, and I’ll sign more!” Don’t shrug that idea off, it’s not as crazy as some may want to argue. Truly think about it.)

This isn’t an endorsement of any politician or party over the other. This is about what both the business community expected, as well as the “markets.” You can’t disappoint one and not the other, they’re intrinsically linked, regardless of what’s currently taught in academia.

Now, suddenly, there are reports that the so-called “tax cuts” (e.g., Brackets) are suddenly being “adjusted” not lower, but higher, and that’s not all…

Taxes that were supposedly going to be eliminated seem to have more staying power than dandelions. Oh, and all that talk about the “simplification” process? (i.e., The “post card” filing process) If adding more brackets, changing “entirely eliminating” to – above this threshold, and only by this much, if this criteria is fulfilled, along with, not eliminating, but “phasing out” and maybe, by year _____(fill in the blank), can all be calculated on a “”post card?” Let’s just say, I’m highly skeptical, to be polite, shall we?

Eliminating any tax is great, but the way this monstrosity is going about making sure every “cut” is “paid for”, is an abomination to any common sense wielding individual. Yet, this one snafu shows just how precarious this entire process now sits. The “Keystone Cops” look like an efficient, synchronized machine in comparison. And we’re only days in, so does this now lose a vote, gain a vote, change a multitude of votes? And if it does, what will it take to regain them? Or worse, what will need to be taken away, or added?

As I warned in a previous article “nothing’s yet been passed, but hot air and gas.” Should further details of the forthcoming “tax cuts” legislation resemble what has transpired over the preceding week with further watering down (think: the corporate rate going from the proposed 20%, to 22% or more, and being phased in over years, just for one) along with the “adding in” of more brackets, or elimination of meaningful deductions in return for “pork barrel” infused additions, will cause those tectonic plates (aka “markets”) to shift from the front-running “Trump trade” of hopium into the leaking lead balloon of deflated tax cut reality.

Oh yeah, and the price tag for all of it gets voted on this week in conjunction, aka FOMC interest rate hike decision.

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The jubilation that was rendered by the “market” over the past week, crystallizing in rocket-ship rides to all-time-highs, cheers and celebration, as the Senate worked feverishly into the wee hours of Saturday to finally write in enough give aways of pet cows, pigs, and other assorted farm animals to deliver the President a much-needed “win” was both surreal, as well as comical.

The issue with all this is: They haven’t truly passed anything. This was all about passing what they’ll now use as a template to further negotiate with, or against, what the House passed. i.e., This thing isn’t over – it’s just getting started.

It doesn’t matter what side of the political spectrum one falls on if they’re in business, for there is agreement on one thing when you ask any business owner, whether small or large: The tax code, along with its rates, are both cumbersome and ridiculous.

This is not only an aberration, but it’s also – an abomination. Allowing it to ever reach the top 10, let alone #1, proves de facto just how far the tax code needs a good overhauling. Yet, hence lies the key. e.g., “good overhauling.”

What we may get in the end is the equivalent of a superficial rebuild, thrown together with shoddy parts by “mechanics” in name only.

The issue that is now coming to light is this: The more we’re finding out what is in this current plan, along with what is not, is beginning to raise quite a few eyebrows. I have a feeling it’s going to raise a lot of ire along with them, as we go along.

As I have warned since this process began: If the “tax reform” bill is found to be nothing more, but a specious headline generating vehicle, rather than a true reform and overhaul? (i.e., at least in actual spirit) All bets are off. And I mean just that – all.

Whether one wants to agree or not, the evidence has now reached beyond questioning. Since the election the “markets” have hitched their bandwagon to not only the idea, but the certainty, that a meaningful tax reform package was going to not only be hashed out, but delivered and signed into law, before the close of 2017.

The “markets” neither waved, or faulted as two of the three-legged-stool consisting of healthcare reform, regulatory reform, and tax reform were annulled. This alone shows you just how important the “tax leg” truly is.

The entire market advance (forgive me for not mentioning “great earnings.” It’s too early in my day for comedy.) has been predicated on a president willing, able, and gladly so, to sign any proposed legislation into law.

Again, for I can not make this point any clearer: Sign into law.

If you don’t believe that premise, look no further for confirmation then how the “markets” reacted to the initial reporting of N. Korea launching a ICBM capable of now hitting anywhere in the U.S. as 3 aircraft carrier battle groups, along with B-2 bombers, and more patrol the peninsula. All while actively conducting war games, upping the potential for the slightest misstep by any, and all involved, potentially unleashing all out thermonuclear war, or WWIII – vs the Flynn plea deal.

The “market’s” reaction? “Look is that a missile? Should we duck and cover?” “Hell no! That’s a dip, back up the truck – and buy, Buy, BUY!!!”

To show the folly of what these “markets” had now become I posted the following chart in a note last week. To wit:

As illustrative as the above may be. What is even more so is what the next one should imply. Again, to wit:

Here’s the obvious: If one still doesn’t think this entire rally is based upon Trump? (i.e., Willing, able, and gladly ready to sign almost anything.) I have some really wonderful ocean-front property in Kentucky you can have, cheap.

The reasoning behind such a claim, again, should be obvious. e.g., Two houses controlled by the same party means diddly if there isn’t a president that will sign it into law. And these two bodies can’t get (or keep) enough votes within their own brethren to get something out of committee half the time, let alone, anything veto proof. It’s beyond bewildering.

We are currently finding out that there are hidden taxes, raising of rates, added brackets, not to mention what we don’t truly yet know with what was horse-traded in and out, just to get this thing out of committee, to now be horse-traded, again, with the House.

You could lose prior House votes with the Senate changes and vice versa. What’s worse is you could lose what is now perceived as “good” for something watered down, or worse, eliminated entirely, while something currently unknown gets added in. i.e., Think: more brackets, (again, infuriating!) sun setting clauses, and hidden rate hikes or fees as just a few examples.

Currently, as would be suspected, the politicians are stampeding to any camera, microphone, or media outlet to profess how this current “tax reform bill” is either the greatest since Ronald Reagan, or the worst since. All depends on which side of the aisle the current talking-head is standing. So since they keep continually bringing up the former president, I believe it’s only fitting to look at what Mr. Reagan’s former budget director thinks of all this. Hint: “Con Job.” Here’s a sample from one of his latest articles. To wit:

“During more than four decades in Washington and on Wall Street it is quite possible that we never picked up any useful skills. But along the way we did unavoidably acquire what amounts to a survival tool in those fair precincts—-namely, a nose for the con job.

And what a doozy we have going now as a desperate mob of Capitol Hill Republicans attempts to enact something—anything— that can be vaguely labeled tax reform/tax cut. And for a reason that lies only slightly below the surface.”

The above was before the now “updated” version since passed out of committee. What is yet to come forth is anyones guess. But guess it is, and that’s not what this “market” has been propelled by.

This entire “Trump trade” was supposedly fueled by certainty. Certainty that meaningful healthcare reform would already be passed. Certainty that meaningful regulatory reform would already be passed with further reforms in the queue. Certainty that meaningful tax reform would not only be banged out, but passed and signed into law before the end of 2017. And all we’ve gotten so far is certainty – that certainty – is anything but. That’s now for certain.

As we now stand this entire “celebration” stands square in the face of a government shut down debate, or debacle, scheduled on the 8th. A Federal Reserve FOMC deliberation ending on the 14th, where the “markets” will find out if the outgoing Chair will deliver a nice great big piece of “holiday cheer” (aka lump of coal) in the form of another rate hike to go along, or spike up the “egg nog”, if you will. (aka as balance sheet normalization.)

Look for Ms. Yellen to be all smiles at the presser as she leaves the stage littered with the tatters of any remaining Fed. credibility to the incoming “clean up crew.” (aka Mr. Powell and the yet named and seated others.)

My gut tells me, the more we find out about what is, and, what is not going to be in this so-called “tax reform” bill. The more hot air and gas of this pre-celebratory party balloon is going to leak out, along with its details. The real issue for the “markets” along with the political class is this:

If this “bill” morphs further along the lines of what Mr. Stockman labeled as a “con job?” Along with the ever-growing concern of a government shutdown and interest rates? This party balloon just might resemble another one. aka: “a lead one.” With similar results.

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For those who have any doubt about my claims on both how adulterated these “markets” are, along with how important passing a meaningful tax reform bill is. I’ll let the following chart speak for itself. To wit:

The above is the S&P 500™ before the “market” open today via 15min intervals. I’ve made a few notations that should provoke some introspective reasoning on where we are, and how precarious we sit.

As always, don’t take my words for anything. Look at the above and come to your own, because those are truly the only ones that matter.

The only thing more troubling about what the above represents, is the shoulders it would seem this entire house-of-cards now rests upon. As I stated yesterday there were already 2 openly declared No votes for the bill in its current form. It would take only 1 more to send it into the waste can. There are now 6 openly opposed, but yet not openly stated as a No. The issue?

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I just received a call from a colleague asking me for a few thoughts, once we ended, I thought I’d share a few responses (actually one) to their inevitable inquiry of, “…and what are your thoughts on this current market hitting all time highs, again?”

Here is a summary of my response for anyone wanting to know…

In a nutshell we could be reaching that moment of time where everything lines in ways where the dominoes, if you will, are all lined up and all it takes is just the slightest movement, at the right place, and at the wrong time, that puts the inevitable “domino effect” into motion.

You can use other analogies like, “The perfect storm”, “The butterfly effect”, et cetera. But what I believe is this: Currently, they all fit.

Use whatever one you like, but this may be that moment in time where these types of analogies to instill caution have their genesis. Again, doesn’t mean it’s an inevitability. The warning, if you will, is for making sure one applies the watchful eye for further signs as to act appropriately, should they appear. So with that said, here’s what I’m alluding to…

The current timing and “market” moves are important for this reason: Is this all – end of the month window dressing; bolstered via near guarantee of no Fed, action for at least a few more weeks; buttressed by the tax bill possibly being voted on before that end ensuring an assumed (that is if it passes) significant “pop” even higher?

The flip side: And what happens if by late Wednesday or Thursday the “tax bill” much like the healthcare debacle is rendered D.O.A? Will there be a mad dash to “sell everything” to lock in gains for both the end-of-month, and quite possibly the year? And if so? Does it cascade into December 1 on Friday?

These can only be answered hypothetically and under the veil using the technical term of “wild-ass-guesses.”

No one knows, however, one needs to think about it, because what is beyond questioning is this: We. Are. Here. And precisely at this confluence of possibilities, as in: Either we “dodge-the-bullet.” Or, the light of what seemed was at the end of the proverbial tunnel is actually a bullet-train and the “market” is straddled across the track doing its best imitation of a deer stuck in the headlights.

Personally, with the hype I see taking place around such things as Bitcoin™, apps for “set it and forget it” investing, and a “market” still under the illusion that the BTFD investing strategy can not fail, has taken on a real posture of surrealism when looking at it from afar, with any objective reasoning. It’s as if 2007/08 never did happen, yet worse, as thinking now goes, “Never will.”

This is (again, all opinion) that moment in time which: It is – what it is – till it isn’t.

And that “isn’t” already has 2 No votes openly declared against it, with another 6 openly opposed, but yet not officially declared as a: No.

Just one more, and this tax bill isn’t going to see the light out of committee, let alone day. And that isn’t what this market expects. And then it will be a mad rush to figure out what to do with the meaning of “is” rather than “isn’t.” As in: The final straw of the hopium trifecta aka “The Trump Trade, e.g., Any – true healthcare reform, true regulatory reform, true tax reform passed and signed before year-end goes from isn’t DOA. To is.

And that’s when the definition of “is” becomes very relevant indeed.

As always, we shall see. But the length of time for that vision, I’m afraid, is not over the proverbial horizon. But rather…

In days of yore (i.e., 2008 BQE) businesses actually had to survive by selling products and services at a price that was more than they cost to produce, as to cover all other ancillary expenses. (I know, heresy, but stay with me.) If they didn’t? They weren’t called a business, they were called a charity.

If they did so manage to do this (i.e. continually, unabated, always replenishing ) for any length of time. Usually, the authorities from any number of agencies (think IRS, FBI, et al) would be knocking on the doors demanding to see the books. For the only way something like that could be taking place usually involved either, “dirty laundry” or someone with a name ending in Ponzi.

Today? It’s just called speculative “investing” or, “Angel” or, “Series A,B,C,” – LMNOP fund-raising. Bernie Madoff must be sitting in his cell wondering, “And just what am I in here for, precisely?”

Since I just brought up Bernie, let me give you what I call a “fun fact” to ponder. Ready?

If Madoff’s “cash burn” had allowed him to survive for about another 18/24 months, or so. (he was arrested in Dec. 2008) He would have been able to not only cover his problematic “cash burn.” But with the help from Mr. “The Courage To Print” Ben Bernanke, he would probably be hailed today as one of the greatest investors of all time. For his so-called “stated” returns would now be inline with what was truly transpiring in the “markets.” i.e., Never a down draft, and consistent double-digit gains for years. And no one would be the wiser, or at least, would care about how he did it. Think about it. But I digress.

Cash-burn since the development and implementation of QE (quantitative easing) and all its corollaries, has morphed from something to be concerned with (i.e., it usually signaled how many days were left before bankruptcy) to now it’s been deemed as something akin to: “No big deal, who cares, sell more Series ____(fill in the blank.) And while you’re at it, structure it so it raises the valuation a few more $Billion. I’m looking at getting a new yacht after this thing IPO’s and I want a big one, with a submarine, helicopter and such, like that Russian dude’s got. Oh, and what’s a ‘trep’ got to do to get a gluten-free-latte around here?”

But that was then, and this is now, and let’s just say, “it’s different this time.”

Just before the holiday Elon Musk took to the stage, once again, to unleash his next creation, in P.T. Barnum fashion, that I deemed “Future Hype.” To be fair, I’m a fan of Mr. Musk and his chutzpah when it comes to big thinking ideas. What I’m speaking directly to here is business, and the models for conducting it.

It is here where “big ideas” have performed what can only be called “magical thinking” alchemy. i.e., The Model S, X, and 3 may be wonderful vehicles, but the business model to produce them are anything but. And it seems Mr. Musk needs to now focus as much time and energy producing future-hype scenarios (think range and power still not developed) to sell the idea to any and all investors, just as much, if not more so, than trying to produce already “sold” production commitments.

Suddenly “Cash Burn” is becoming a hot topic. I was surprised (actually very) to read two very provoking pieces in regards to Tesla™ over the last few days. First, there’s the outright questioning of battery claims. But what caught my attention was the second, which almost in the same breath, suddenly questions Tesla’s survivability claims based on current (wait for it…)cash-burn projections.

Do you, or can you dear reader, remember a time before this year when business metrics, of any type, where the two words “cash burn” were included or even questioned? Let alone, actually laid out prompting that “concern” might be a reasonable conclusion going forward anywhere in the mainstream business/financial media? Again – anywhere?

It would appear the worm-has-turned (or turning) in the “it’s different this time” bottle of magical business alchemy, yes?

Suddenly Mr. Musk’s claims, rationales, or responses to anything regarding his entire business structure are now open game for in-depth questioning and testing of metrics where 2+2=4 math applies. This alone should be concerning for any and all BTFD devotees, regardless if one is an investor in Tesla, or just the broader “markets.”

The reasoning? Just look at a current snap-shot regarding the big-picture, if you will. Where future-hype had once reined supreme. Here’s an example, for if a picture tells a thousand words, than a chart can portend $Billions of reasons for concern. To wit:

The above is a chart showing Tesla on the left and the NASDAQ 100™ on the right, via daily intervals. Notice anything? That’s right, suddenly, as sung by Sesame Street®, “One of these things is not like the other…”

The time frames are the same, but no longer is their BTFD trajectory in lock-step, as they once were. Today, that “trajectory” seems to be stunted as further questioning of prior claims, promises, and future-hype takes its toll on questioning “investors.” Unlike the Nasdaq which still (at least for the time being) has its BTFD mojo propellant working in the unquestioning vacuum of central bank hopium.

So here’s where things get interesting from a cash-burn prospective. How, you say? Good question, and it is this: If, Tesla the stock just hovers in its current location, what are the ramifications (again, if any for it’s all conjecture) if we suddenly have some form of a pull back, or heaven forbid, bonafide correction within the very near future?

Again, if the indexes such as the Nasdaq and others, which have been impervious to any and all bad news, whiffs of impending Armageddon, European sovereign risks, Middle East turmoil, just to name a few: What happens to not just a cash-burn dependent company such as Tesla? But rather, the entire complex?

What complex is that? Once again, great question, did I mention unicorns yet? Let’s do that now, shall we?

I’m only going to use one for this example, not to pick on them, but I really feel there is no other mascot of the current unicorn debacle that sums up everything facing it. Of course I’m speaking of Uber™.

And here again is where “it’s different this time” thinking has turned in Judas fashion against the once claims and models for valuation, and business domination.

Over the last year, or so, there have been more negative stories in regards to Uber than positive. This once Wall Street darling has gone from championed mythical creature sporting a “horn made of gold” – to having its head removed in full public view, then allowed to be seen via that same public reminiscent of the old joke of “letting it run around with its head removed as it continued to spurt “cash.” (i.e., Remember the initial and unfolding debacle with its CEO’s ousting and its fallout, all while it was publicly reported on, and playing out with, its Board and current investors?)

And then, suddenly, like a bolt-of-lightning from beyond, cash-burn questions began, and are becoming the norm, when any discussion about them arrises. Talk about its different this time!

The problem here for Uber (and all its stable mates, I’ll contend) is it faces the same abnormality as does Tesla. For it would seem the old “play book” is no longer working. Because, if the underlying cash-burn issues it has will not go away, nor, at the least be turned a blind-eye as was prior? Are you beginning to see my point?

Again, if the “market” as much as hiccups in the very near future: Will the putting of money in the line of fire of further cash-burn, with no end in sight, be the first place scared money goes? Or, the last? And if it’s the latter?

Add to this this almost forgotten item: If the Fed. does indeed raise in a few weeks, and the budget debacle begins simultaneously, along with the possibility of a failed meaningful tax bill by year-end?

Can you say, “It’s different this time?” The reasoning? These business models needed to produce, or reduce the concern of cash-burn, stat. And not only does that not appear to be happening within these once “darlings”, but rather, they’re disappearing along with ever-the-more “cash” at an alarming rate and scale.

Uber it seems is losing more territory than its gaining, the latest is London. But what’s more concerning is the loss of its perceived credibility for forging a more disciplined path forward. And it’s here where things might go awry in a manner and form once vigorously outmaneuvered or outright disregarded.

Here I’m speaking to the revelation that Uber not only had a data breach, but paid to cover it up, and the new CEO, the new supposed “adult in the room” reportedly also knew, months in advance.

Can you say, “Oh, oh?”

The issue again here is this: The future-hype playbook is no longer effective as it once was. But it’s not for a lack of trying, I’ll contend.

The media was all abuzz about 6 days ago (remember this time line) with the proclamation that Uber entered into an agreement with Volvo™ to purchase up to 24,000 self driving vehicles. Sounds just “fantastic!”, right? What you may not of heard about (unless you’re truly paying attention) is that about 5 days ago Colorado fined Uber $8.9 Million for driver issues. Funny how that driver issue thingy came only a day after the hoopla of setting the stage for not needing drivers at all. Can you say “future-hype?” But that’s just me, I guess.

However, this data breach debacle may be the very issue that any type of “hype” future, or not, may not quell. For if there’s one thing governments and politicians, of all types, whether it be in certain locales, nations, or otherwise. There’s one thing they all have in common and will agree on – if there’s an issue to place their bullseye on when it comes to their fund-raising. Let’s just say, laser-focus and pit-bull-jaws immediately come to mind.

And this (e.g., data breach) is just the sort of issue that allows politicians to decry for justice, and the extraction of large quantities of cash-burn resources, out of “their public duty and concern for constituent, or consumer protection!”

It would be somewhat ironic if it was a government regulatory issue that causes Uber the most distress at this point in its life, since it has openly made a mockery of how it both felt, dealt with, as well as adhered, to any so-called rules, regulations, or business ethics since it began.

And make no mistake: “Cover up”, and “data breach” are two terms no company wants any politician to be both able too say, let alone prove it’s correct, in today’s current political environment. Hint: See Equifax™, or even Wells Fargo™ for clues.

You think any of this “future-hype” along with “cover-up” has anything to do with keeping any Softbank™ hope of investing further cash burn fuel alive?

And if it didn’t, or doesn’t?

Heads will roll, again, for any and all “it’s different this time” believers, showered in the electric sparks from a crashing “its different this time” reality.

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In Septemer of 2014 I dared not only speak the unthinkable, but to the howls and screams of next-in-rotation fund mangers, Silicon Valley aficionados, mainstream financial/business media outlets et al, I dared stand behind my reasoning too this day. And yes, even in the face of an unrelenting melt-up.

The issue that is now quite apparent in retrospect, yet still unspoken by most, has been that it has been my observations that have not only come to fruition, but are becoming increasingly hard to miss even for those trying. Here’s an example. To wit:

Come this October the Federal Reserve will make its final tranche of QE available. The amount assumed by many is that it will be 50% larger than what we’ve seen over these last years. ($15 Billion as opposed to $10)

One may see an increased flurry of buying into anything and everything that has even the slightest possibility of making a profit. Or, what Wall Street cares about even more; a growth story that can be perpetuated via financial engineering that sticks during earnings seasons.

But, one shouldn’t read into this as “confirmation” the risk appetite story is not only alive but growing. For that is all about to change.

Once the Fed shuts down the section of QE that has been pumping Billions upon Billions of dollars every month – it’s over for a great many of today’s Wall Street darlings.

The above, at that time, was seen as not only blasphemy, but was met with screams, howls, gnashing of teeth, and more. And that’s just from the business/financial media. When it came to next-in-rotation fund-managers or VC’s? Let’s just say, I’ll keep that dialogue from the view of polite minded eyes.

So why is the above relevant today one might ask? Fair point, and it is this…

Just as this was seen as the first “shot” in the war across the entire “It’s different this time” defensive mindset. It seems that the end to this foolish war against any-and-all fundamental business reasoning (as in making a net profit, for one) may be drawing closer to a close. What do I have to offer as evidence one might ask? Good question, and it is this, again, to wit:

“The social media boom, powered by the growth of mobile computing, is over. And while a glittering new technological age of artificial intelligence beckons, the current cycle seems bloated and fatigued. It’s no wonder venture capitalists are looking elsewhere.”

All I’ll say is this: Much like when Pres. Johnson was claimed after watching Walter Cronkite deliver a thought provoking editorial against the mindset for continuing the Vietnam debacle, where he supposedly lamented, saying, “If I’ve lost Cronkite…” signaling he had lost support. In keeping with that theme, because I believe it fits…

If Silicon Valley has lost Vanity Fair?

And if you don’t think being on magazine covers, or having glossy photo shoots of Silicon Valley “stars” was important to those seemingly more addicted to fame than their business models, may I remind you here, here, and here.

Footnote: These “FTWSIJDGIGT” articles came into being when many of the topics I had opined on over the years were being openly criticized for “having no clue”. Yet, over the years these insights came back around showing maybe I knew a little bit more than some were giving me credit for. It was my way of tongue-in-cheek as to not use the old “I told you so” analogy. I’m saying this purely for the benefit of those who may be new or reading here for the first time (and there are a great many of you and thank you too all). I never wanted or want to seem like I’m doing the “Nah, nah, nah, nah, nah” type of response to my detractors. I’d rather let the chips fall – good or bad – and let readers decide the credibility of either side. Occasionally however, there are, and have been times they do need to be pointed out which is why these now have taken on a life of their own. (i.e., something of significance per se that may have a direct impact on one’s business etc., etc.) And readers, colleagues, and others have requested their continuance.

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From my family to yours, have a wonderful Thanksgiving holiday for those celebrating in the U.S.

On an another note, may I say thank you to every one of you that have found any of my work, of any interest over these years across the globe wherever you may be. And yes, this includes any detractors as well. Again, thank you.

Mark

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I consistently mention China and the trouble that it could unleash across the global “markets.” The reason being, should there be any misgivings in regard to how the politburo handles its ever evolving, ever-growing shadow banking and finance schemes the ensuing fallout could be, for lack of a better word, let’s just say, epic.(i.e., Much I like I warned throughout 2014 which culminated with China turmoil resulting in bringing all three U.S. futures markets to go “lock limit down” in 2015)

The reasoning is simple: There are literally magnitudes higher of potential volatility, as well as potentially destructive chaos with global implications, than what initiated the first chain reaction for financial mass destruction in 2007-08 that begat what we now know as the Great Financial Crisis. And no, I’m not trying to be hyperbolic.

In other words, China’s potential for financial meltdown is not only, by far, more disruptive. But (and it’s a very big but) it is also far more volatile and currently so. The only reason why there is any semblance of “control” now taking place is, because the politburo will either, 1) Not let it be reported. And, 2) Desperately change rules or laws, on the fly, to quell any panic. And if that doesn’t work? Arrest and detain anyone they feel may say anything other than “Things are just ducky!”

The latest example of this was on display right before, as well as during, the most recent conclave of China’s Party Congress. i.e., Any and all bad or concerning news about any and all business reporting was not allowed by decree. That’s what doing business in a communist regime is truly like.

Logically, that would also imply, or one could infer, that there’s a flip side, as in: All, or any “good news” would be deemed “just fantastic!” and would be unleashed into the Chinese markets with a furor to celebrate the now written into the Chinese rolls: President Xi Jinping. Cementing both his place in history, as well as what he supposedly now represents (i.e., China’s business and economic wealth and stronghold on the global stage) into China’s history books for the ages.

The result? I’ve mentioned it many times over the last few weeks with one expression that seems to fit. e.g., (cough cough Hang Seng cough cough.)

But today I would like to leave you with a “picture” as they say in Silicon Valley, aka a chart. To wit:

The above is a chart representing the Hang Seng index (The Chinese equivalent of the U.S. Dow) using daily intervals. There’s a lot of worthy warning signs within this chart via a technical analysis viewpoint. But for right now I have highlighted one that has really caught my eye in conjunction with the further, recent events within China, as well as abroad.

Just as I have highlighted similar things concerning U.S. indexes, this one, has the potential for creating far more seismic waves than most others combined. Hint: Here’s just one quick reminder back only in 2016 of just how fast things can change in China for those suffering any memory loss.

With the U.S. “markets” already operating in holiday mode, any overnight disruption in China’s markets, along with what may be brewing in unison in Europe, it all feels like a tinder-box in search of a match. All I’m saying in regards to all this, is this: This is one of those periods, once again, that all eyes should be where it seems the mainstream financial/business media cares not to even recognize, let alone look.

As I always say, “If you’re in business, you can’t afford not to. Period.” Because remember…

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